1. Temporary reduction of sales tax rate
To strenghten the domestic demand, the sales tax rate will be reduced from 19% to 16% and from 7% to 5 % in the period from 1 July until 31 December 2020.
The change of the sales tax rate is associated with a lot of bureaucracy for the companies. They have to adjust their invoice writing as well as their cash register system.
General principles: The reduced tax rate of 16% or rather 5% can only be used for those sales, which will be realised after 30 June 2020. From 1 January 2021 the sales tax rate will change back to 19% or rather 7% (in case the government will not find another regulation).
The implementation date depends on the type of sales:
• Delivery and intra-Community acquisition of a good is excuted at the moment when the buyer gets the authority to dispose.
• Work delivery is realised when the buyer has taken the product.
• Service is realised when the service is performed.
• Nonpaid use of company property outside the company is realised when the fictitious service has taken place.
Please consider! There are special regulations for advance payments, in case of taxation according to monies received (actual-taxation), settlement of partial services, ongoing services) and if the basis of assessment will be changed after 30 June 2020 or 1 January 2021.
There are also special regulations for catering. The sales tax rate is reduced for all dishes up from 1 July 2020 from 19% to 7%. The reduction is fixed for exactly one year, until 30 June 2021. After the general sales tax rate of 7% has been reduced to 5%, this will also effect the catering until 31 December 2020.
From 1 January until 30 June 2021 the reduced sales tax rate of 7% prevails all dishes. From 1 July 2021 the general sales tax rate of 19% will be valid if the government will not find another regulation.
The point of time, when the contracts are closed or the invoices are billed or whether the reward is received is irrelevant for the question which tax rate -19% or 16% or rather 7% or 5%- has to be used.
Companies with cash dealings, which are using electronical cash registers have to adjust them before 1 July 2020. They should ask the producer of their cash register soon, to ensure that everythink works correctly.
2. Interim aid
For sales, which could not be realised because of Corona, there will be a interim aid from June untll August 2020. Generally it will help all industries, but of course it should help particular those industries, which are most affected by the Corona-Virus; for example industries like catering, hotels, pubs, clubs and bars, travel agencies, actors, event agencies, exhibitiors and social amentities.
Companies, which Corona wised sales in April and May 2020 where reduced at least by 60% (compared to the period in the previous year), and which sales continue to stay reduced from June until August 2020 at a minimum of 50%, can apply for the interim aid. Companies, which were founded after April 2019, have to take the months November and December 2019.
Refundable are up to 50% of the fixed operating expenses, if the sales are reduced by a minimum of the 50% compared to the month of the previous year. If the sales reduced more than 70%, 80% of the fixed operating expenses can be refunded. The maximum refund amounts to € 150.000 for three months.
For companies with up to five employees the refund will amount to maximal € 9,000.00 and for companies with up to ten employees maximal € 15,000.00.
The loss of sales and the fixed operation expences have to be audited and confirmed by a tax accountant or a certified public accountant. Overpayment has to be returned.
The deadline to apply for interin aid is 31 August 2020. The deadline for the payments is 30 November 2020. If these deadlines are realistic is questionable.
3. Social security contributions will be stabilized
To prevent a raise of the amount of incidental wage costs, the social security contributions are stabilized by a maximum of 40%. The outcome of this is, that the net income of the employees is protected and that the employers have more reliability.
4. Implementation of a declining balance method of depreciation
For 2020 and 2021 the government wants to implement a declining balance method of depreciation with the factor of 2,5 compared to the currentiv guilty depreciations rate, but only up to a maximum amount of 25% per year.
5. Child bonus
The government is planning a one-time child bonus in the amount of € 300,00 for each child which is entitled for child benefits. The bonus should support especially those families, which are most affected by the crisis. The bonus is comparable with the tax deduction for children and will be settled with the child benefit.
6. Temporrary increase of the relief amount for single parents
Limited for the years 2020 and 2021 the relief amount for single parents raises from currently € 1,908.00 up to € 4,000.00. The increase should support those single parents, which have additional costs for the care of their children because of the crisis.
7. Funding of training places
Small and medium-sized enterprises (SME`s), which do not reduce their provision of training places in 2020 compared to the previous three years, are able to get a one-time bonus in the amount of € 2,000.00 for each concluded traning contract. The bonus is payed out after the trainee has passed the probation period. If you increase your traning places, you can additionally get a bonus in the amount of € 3,000.00 for each concluded training contract.
Small and medium-sized enterprises, which continue their training and do not demand short-time work for their trainees and trainers, can get this bonus. Small and medium-sized enterprises, which are not able to continue the training, will get the opportunity for a temporary supported operative network or commission traning.
Details about the opportunity for a temporary supported operative network or commission traning can be found on the website of alliance of initial and continuing education: www.aus-und-weiterbildungsallianz.de.
8. Import-turnover tax
The due date of import-turnover tax is switching to the 26th of the following month.
Please consider !
The legal basis of this stimulus package still has to be adopted as legal regulations. Therefore there can be modifications in detail. Next to the mentioned measures, the government is planning a variety of further supports. We will keep you updated about the tax-related topics.